2.Empirical studies have found that countries with low labor standards generally

Question

2.Empirical studies have found that countries with low labor standards generally attract less foreign investment due to the fact that

Select one:

a. low labor standards are highly correlated with labor forces that are unskilled and illiterate.

b. Poor countries are communist countries.

c. Poor countries have poor infrastructure - so in many cases investment is not justified even thought the wages are low in these countries.

d. poor countries have questionable human rights laws.

e. A and C only.

3. Bhagwati points out that even if "Race to/towards the Bottom" idea is correct

Select one:

a. All industries in the developed world cannot experience capital flight (due to the theory of comparative advantage).

b. Sullivan Principle cannot hold.

c. Stolper-Samuelson theorem cannot hold.

d. Kuznets curve cannot hold

4.According to Paul Krugman, Ricardo-HO theories and the consequent free trade policies have been challenged by:

Select one:

a. Imperfect competition models of international trade.

b. Theories of strategic trade policy

c. Increasing returns as an important feature of production process

d. All of the above.

5.Paul Krugman, in his famous article, "Is Free Trade Passe?" says that:

Select one:

a. Free Trade theory had serious faults which Heckscher Ohlin later corrected.

b. It is possible to believe that (1) comparative advantage is an incomplete model of trade and to believe that (2) free trade is nevertheless the right policy.

c. Free trade will be passe if NAFTA is successful.

d. Free trade never existed as a government policy.

6.Other than constructing trade barriers, what are the possible alternatives that can address the important issues of labor and environmental standards?

Select one:

a. Laws may require that the standards in home Country A be followed by Country A firms operating abroad in Country B.

b. Increased international negotiations

c. Greater support for the ILO

d. Increasing support for international environmental agreements

e. All of the above.

7.According to the infant industry argument, an industry which is currently inefficient but has high potentials in the future should be protected by tariff in order for the industry to grow and mature. But the critics argue that:

Select one:

a. the government may not be able to choose the winners any better than the private sector can.

b. It may be difficult to empirically distinguish between the true "infants" with potentials for success and the industries with strong protectionist lobbies.

c. If it is easy to borrow, the private sectors can borrow, suffer loss for sometime and make profit eventually. The government need not help them.

d. All of the above.

8.A "Race to the Bottom" refers to a situation where countries try to compete against each other for investment by

Select one:

a. implementing new product standards that discriminate against imports.

b. harmonizing their labor, environmental, and other policy standards.

c. reducing their standards on labor, environmental, or other policy issues.

d. increasing their standards on labor, environmental, or other policy issues.

9.Which of the following is a reason why the use of trade barriers to enforce labor or environmental standards may be less efficient than other measures?

Select one:

a. Without a coalition of countries, which are difficult to assemble, the trade barriers may

b. The imposition of trade barriers may make conditions worse rather than better, since some producers may move their facilities into the informal sector of the economy.

c. The trade barriers may come to be exploited by special interest groups for ulterior motives. Trade barriers are very costly, creating deadweight losses in consumption and production at home.

d. All of the above are reasons why trade barriers tend to be weak enforcement mechanisms.

10.Consider the case of a small country below that faces a world price pw for its product Q. The country produces at Q2 and exports (Q2 - Q1) so that the domestic consumption is at Q1. Now suppose this country relaxes it's environmental protection laws. Assuming that the original supply curve, S (which is essentially the marginal cost curve), truly represented the cost to the society, a relaxation of environmental protection laws would:

Select one:

a. effectively lead to downward shift of the line pw.

b. effectively lead to a downward shift of the supply curve S.

c. effectively lead to an upward shift of the supply curve S.

d. effectively lead to an upward shift of the demand curve Dx.

CAN YOU PLEASE HELP ME WITH THESE 9 QUESTIONS? THX!

Explanation / Answer

Ans 2 – A and C only

Ans 3 – Sullivan principle cannot hold

Ans 4 – Imperfect competition models of international trade.

Ans 5 – It is possible to believe that (1) comparative advantage is an incomplete model of trade and to believe that (2) free trade is nevertheless the right policy.

Ans 6 – All of the above

Ans 7 – It may be difficult to empirically distinguish between the true "infants" with potentials for success and the industries with strong protectionist lobbies.

Ans 8 – reducing their standards on labor, environmental, or other policy issues.

Ans 9 – All of the above are reasons why trade barriers tend to be weak enforcement mechanisms.

Ans 10 – effectively lead to an upward shift of the supply curve S.

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